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2011-09-30
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2011-09-30
0001012019
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2010-12-31
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2010-12-31
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us-gaap:CommonClassAMember
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iso4217:USD
xbrli:shares
xbrli:shares
iso4217:USD
RUSH ENTERPRISES INC \TX\
0001012019
--12-31
No
No
Yes
Accelerated Filer
10-Q
false
2011-09-30
Q3
2011
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<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 1 - us-gaap:OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-->
<!-- xbrl,ns -->
<!-- xbrl,nx -->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="left">
</div>
<div align="center" style="font-size: 10pt; margin-top: 0pt"><b></b>
</div>
<div align="center" style="font-size: 10pt"><b></b></div>
<div align="center" style="font-size: 10pt"><b></b></div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>1 — Principles of Consolidation and Basis of Presentation</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The interim consolidated financial statements included herein have been prepared by Rush
Enterprises, Inc. and its subsidiaries (collectively referred to as the “Company”), without
audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the
“SEC”). All adjustments have been made to the accompanying interim consolidated financial
statements, which, in the opinion of the Company’s management, are necessary for a fair
presentation of the Company’s operating results. All adjustments are of a normal recurring
nature. Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. It is recommended that these
interim consolidated financial statements be read in conjunction with the consolidated
financial statements and the notes thereto included in the Company’s Annual Report on Form
10-K for the year ended December 31, 2010. Results of operations for interim periods are not
necessarily indicative of results that may be expected for any other interim periods or the
full fiscal year.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 2 - us-gaap:GoodwillAndIntangibleAssetsDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>2 — Goodwill and Other Intangible Assets</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In August 2011, the Company determined that the SAP enterprise software and SAP dealership
management system were ready for their intended use, placed them in service and began
amortization of the capitalized costs of the software. The total capitalized costs of $42.5
million are recorded on the Consolidated Balance Sheet in Other Assets, net of accumulated
amortization of $0.5 million. The SAP software will be amortized over a period of 15 years.
The Company is currently operating several Rush Truck Centers in Texas and a majority of its
leasing operations on the SAP enterprise software and SAP dealership management system. The
Company plans to convert all of its Rush Truck Centers and leasing operations to the SAP
enterprise software and SAP dealership management system over the next three years.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Goodwill is the excess of the purchase price over the fair value of identifiable net
assets acquired in business combinations accounted for under the purchase method. The Company
does not amortize goodwill, but tests goodwill for impairment annually in the fourth quarter,
or when indications of potential impairment exist. These indicators would include a
significant change in operating performance, the discontinuance of operations by certain
manufacturers the Company represents, or a planned sale or disposition of a significant
portion of the business, among other factors. The Company tests for goodwill impairment
utilizing a fair value approach at the reporting unit level. A reporting unit is an operating
segment, for which discrete financial information is prepared and regularly reviewed by
segment management. The Company has deemed that its reporting unit is its operating segment,
the Truck segment, which is the level at which segment management regularly reviews operating
results and makes resource allocation decisions. The Construction Equipment segment is no
longer reported as a separate business segment because the Company sold its John Deere
construction equipment business in the third quarter of 2010. See Note 11 for further
discussion of the sale of the construction equipment business.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The impairment test for goodwill involves comparing the fair value of a reporting unit to
its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds
its fair value, a second step is required to measure the goodwill impairment loss. The second
step includes hypothetically valuing all the tangible and intangible assets and liabilities of
the reporting unit as if the reporting unit had been acquired in a business combination. Then,
the implied fair value of the reporting unit’s goodwill is compared to the carrying amount of
that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied
fair value of the goodwill, the Company would recognize an impairment loss in an amount equal
to the excess, not to exceed the carrying amount. The Company determines the fair values
calculated in an impairment test using the discounted cash flow method, which requires
assumptions and estimates regarding future revenue, expenses and cash flow projections. The
analysis is based upon available information regarding expected future cash flows of its
reporting unit discounted at rates consistent with the cost of capital specific to the
reporting unit.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">No impairment write down was required in the fourth quarter of 2010. However, the
Company cannot predict the occurrence of certain events that might adversely affect the
reported value of goodwill in the future.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table sets forth the change in the carrying amount of goodwill for the
Company for the period ended September 30, 2011:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="86%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Balance December 31, 2010
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">150,388</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Acquisition of Asbury Automotive Atlanta, L.L.C.(See Note 9)
</div></td>
<td> </td>
<td> </td>
<td align="right">24,824</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Acquisition of Heintzelman’s Truck Center (See Note 9)
</div></td>
<td> </td>
<td> </td>
<td align="right">1,050</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Other
</div></td>
<td> </td>
<td> </td>
<td align="right">67</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Balance September 30, 2011
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">176,329</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 3 - us-gaap:CommitmentsAndContingenciesDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>3 — Commitments and Contingencies</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Company is contingently liable to finance companies for certain notes initiated on
behalf of such finance companies related to the sale of commercial vehicles. The majority of
finance contracts are sold without recourse against the Company. A majority of the Company’s
liability related to finance contracts sold with recourse is generally limited to 5% to 20% of
the outstanding amount of each note initiated on behalf of the finance company. The Company
provides for an allowance for repossession losses and early repayment penalties that it may be
liable for under finance contracts sold without recourse.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Company is involved in various claims and legal actions arising in the ordinary
course of business. The Company believes it is unlikely that the final outcome of any of the
claims or proceedings to which the Company is a party would have a material adverse effect on
the Company’s financial position or results of operations; however, due to the inherent
uncertainty of litigation, there can be no assurance that the resolution of any particular
claim or proceeding would not have a material adverse effect on the Company’s results of
operations for the fiscal period in which such resolution occurred.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 4 - us-gaap:EarningsPerShareTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>4 — Earnings Per Share</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table sets forth the computation of basic and diluted earnings per share:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="44%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Three Months Ended September 30,</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Nine Months Ended September 30,</td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Numerator:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Numerator for basic and diluted earnings per
share, income from continuing operations
available to common shareholders
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">16,045,000</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">8,031,000</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">35,830,000</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">15,369,000</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Denominator:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:45px; text-indent:-15px">Denominator for basic earnings per share,
adjusted weighted average shares outstanding
</div></td>
<td> </td>
<td> </td>
<td align="right">37,932,300</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">37,349,899</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">37,796,072</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">37,271,416</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:45px; text-indent:-15px">Effect of dilutive securities:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:45px; text-indent:-15px">Employee and director stock options and restricted
share awards
</div></td>
<td> </td>
<td> </td>
<td align="right">1,026,598</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">848,479</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,159,396</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">815,593</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:45px; text-indent:-15px">Denominator for diluted earnings per share,
adjusted weighted average shares outstanding
and assumed conversions
</div></td>
<td> </td>
<td> </td>
<td align="right">38,958,898</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">38,198,378</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">38,955,468</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">38,087,009</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Basic earnings per common share from continuing
operations
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">0.42</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.22</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.95</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.41</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Diluted earnings per common share and common
share equivalents from continuing operations
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">0.41</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.21</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.92</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.40</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Options to purchase shares of common stock that were outstanding for the three
months and nine months ended September 30, 2011 and 2010 that were not included in the
computation of diluted earnings per share because the effect would have been anti-dilutive are
as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="44%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Three Months Ended</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Nine months Ended</td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">September 30,</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">September 30,</td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Anti-dilutive options
</div></td>
<td> </td>
<td> </td>
<td align="right">684,645</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">990,330</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">536,100</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">985,830</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 5 - us-gaap:DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>5 — Stock Options and Restricted Stock Awards</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Valuation and Expense Information</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Company accounts for stock-based compensation in accordance with Accounting Standards
Codification (“ASC”) 718-10, “Compensation — Stock Compensation,” which requires the
measurement and recognition of compensation expense for all share-based payment awards made to
the Company’s employees and directors including employee stock options, restricted share
awards and employee stock purchases related to the Employee Stock Purchase Plan based on
estimated fair values. Stock-based compensation expense, calculated using the Black-Scholes
option-pricing model and included in selling, general and administrative expense, was $0.9
million for the three months ended September 30, 2011, and $0.7 million for the three months
ended September 30, 2010. Stock-based compensation expense, included in selling, general and
administrative expense, for the nine months ended September 30, 2011, was $4.8 million and for
the nine months ended September 30, 2010, was $3.6 million. As of September 30, 2011, there
was $8.3 million of total unrecognized compensation cost related to non-vested share-based
compensation arrangements to be recognized over a weighted-average period of 3.3 years.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 6 - us-gaap:FairValueDisclosuresTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>6 — Financial Instruments and Fair Value</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Certain methods and assumptions were used by the Company in estimating the fair value of
financial instruments at September 30, 2011. The carrying value of current assets and current
liabilities approximates the fair value due to the short maturity of these items.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The fair value of the Company’s long-term debt is based on secondary market indicators.
Since the Company’s debt is not quoted, estimates are based on each obligation’s
characteristics, including remaining maturities, interest rate, credit rating, collateral,
amortization schedule and liquidity. The carrying amount approximates fair value.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">If investments are deemed to be impaired, the Company determines whether the impairment
is temporary or other than temporary. If the impairment is deemed to be temporary, the
Company records an unrealized loss in other comprehensive income. If the impairment is deemed
other than temporary, the Company records the impairment in the Company’s consolidated
statement of operations.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In prior years, the Company invested in interest-bearing short-term investments primarily
consisting of investment-grade auction rate securities classified as available-for-sale and
reported at fair value. These types of investments were designed to provide liquidity through
an auction process that reset the applicable interest rates at predetermined periods ranging
from 1 to 35 days. This reset mechanism was intended to allow existing investors to continue
to own their respective interest in the auction rate security or to gain immediate liquidity
by selling their interests at par.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As a result of the liquidity issues experienced in the global capital markets, auctions
for investment grade securities held by the Company have failed. An auction fails when there
is insufficient demand. However, a failed auction does not represent a default by the issuer.
The auction rate securities continue to pay interest in accordance with the terms of the
underlying security; however, liquidity will be limited until there is a successful auction or
until such time as other markets for these investments develop. The Company has the intent
and ability to hold these auction rate securities until liquidity returns to the market. The
Company does not believe that the lack of liquidity relating to its auction rate securities
will have a material impact on its ability to fund operations.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As of September 30, 2011, the Company held auction rate securities with underlying
tax-exempt municipal bonds that mature in 2030 that have a fair value of $6.6 million and a
cost basis of $7.6 million. These bonds have credit wrap insurance and a credit rating of Aa3
by Moody’s.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As of September 30, 2011, the Company has valued these investments at fair value. The
Company used observable inputs to determine fair value, including consideration of broker
quotes, the overall quality of the underlying municipality, the credit quality of the
insurance company, and observable transactions. Accordingly, the Company has considered this
fair value to be a Level 2 valuation under ASC 820-10, “Fair Value Measurements and
Disclosures.” In the second quarter of 2011, the Company recorded a pre-tax impairment charge
of $1.0 million on these investments. The Company believes that the impairment is temporary
and has recognized the impairment in accumulated other comprehensive loss.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The table below presents disclosures about the financial instruments measured at fair value on
a recurring basis in the Company’s financial statements as of September 30, 2011 and December 31,
2010 (in millions):
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="44%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="14" style="border-bottom: 1px solid #000000"><b>At September 30, 2011</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 1px solid #000000"><b>Fair Value Estimated Using</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Cost Basis</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Level 1</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Level 2</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Level 3</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Amount</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Inputs</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Inputs</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Inputs</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Investment in auction rate securities
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">7,575</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">6,628</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="44%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="14" style="border-bottom: 1px solid #000000"><b>At December 31, 2010</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 1px solid #000000"><b>Fair Value Estimated Using</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Cost Basis</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Level 1</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Level 2</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Level 3</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Amount</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Inputs</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Inputs</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Inputs</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Investment in auction rate securities
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">7,575</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">7,575</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Interest Rate Swap Agreements</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Company has entered into swap agreements to hedge against the potential impact of
increases in interest rates on its floating-rate real estate debt instruments. Swap
agreements that hedge exposures to changes in interest rates expose us to credit risk and
market risk. Credit risk is the potential failure of the counterparty to perform under the
terms of the swap agreement. The Company attempts to minimize this risk by entering into
transactions with high-quality counterparties. Market risk is the potential adverse effect on
the value of the swap agreement that results from a decline in interest rates. The market
risk associated with interest-rate contracts is managed by establishing and monitoring
parameters that limit the types and degree of market risk that may be undertaken.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">At September 30, 2011, the Company had an aggregate $45.0 million notional amount of
interest rate swap contracts, which have been designated as cash flow hedges, to pay fixed
rates of interest and receive a floating interest rate based on LIBOR. The fixed interest
rates specified in the interest rate swap contracts become effective on or about January 1,
2012. The Company’s interest rate swaps qualify for cash flow hedge accounting treatment.
Unrealized gains or losses are recorded in accumulated other comprehensive loss. Realized
gains and losses will be recognized in interest expense, if they occur. Amounts to be received
or paid under the contracts will be recognized as interest expense over the life of the
contracts. There was no ineffectiveness for these swaps during the quarters ended September
30, 2010 and September 30, 2011.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The fair value of cash flow swaps is calculated as the present value of expected future
cash flows, determined on the basis of forward interest rates and present value factors. As
such, the carrying amounts for these swaps are designated to be Level 2 fair values and
totaled $2.1 million as of September 30, 2011. The carrying value of these swaps is included
in Other Long-Term Liabilities on the accompanying Consolidated Balance Sheet as of September
30, 2011.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As of September 30, 2011, the Company was party to derivative financial instruments as
described in the following table (in thousands):
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="24%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="31%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Fixed</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center"> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Notional</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Interest</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center"> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b>Agreement</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Amount</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Rate</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"><b>Expiration Date</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Fair Value</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr>
<td align="left" valign="top"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest Rate Swap
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">2,196</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">5.075</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td align="center" valign="bottom">July 1, 2015</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(96</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest Rate Swap
</div></td>
<td> </td>
<td> </td>
<td align="right">4,536</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">5.075</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td align="center" valign="bottom">July 1, 2015</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(198</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest Rate Swap
</div></td>
<td> </td>
<td> </td>
<td align="right">7,847</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">5.39</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td align="center" valign="bottom">December 31, 2014</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(339</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest Rate Swap
</div></td>
<td> </td>
<td> </td>
<td align="right">1,517</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">5.39</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td align="center" valign="bottom">December 31, 2014</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(66</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest Rate Swap
</div></td>
<td> </td>
<td> </td>
<td align="right">2,700</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">5.39</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td align="center" valign="bottom">December 31, 2014</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(117</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest Rate Swap
</div></td>
<td> </td>
<td> </td>
<td align="right">6,109</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">5.39</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td align="center" valign="bottom">December 31, 2014</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(264</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest Rate Swap
</div></td>
<td> </td>
<td> </td>
<td align="right">5,616</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">5.38</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td align="center" valign="bottom">June 29, 2015</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(311</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest Rate Swap
</div></td>
<td> </td>
<td> </td>
<td align="right">864</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">5.29</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td align="center" valign="bottom">June 30, 2015</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(45</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest Rate Swap
</div></td>
<td> </td>
<td> </td>
<td align="right">1,656</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">5.29</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td align="center" valign="bottom">June 30, 2015</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(87</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest Rate Swap
</div></td>
<td> </td>
<td> </td>
<td align="right">8,352</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">5.29</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td align="center" valign="bottom">June 30, 2015</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(437</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest Rate Swap
</div></td>
<td> </td>
<td> </td>
<td align="right">720</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">5.29</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td align="center" valign="bottom">June 30, 2015</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(38</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest Rate Swap
</div></td>
<td> </td>
<td> </td>
<td align="right">2,894</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">5.29</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td align="center" valign="bottom">June 30, 2015</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(151</td>
<td nowrap="nowrap">)
</td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 0pt; text-indent: 4%">
Fair values of derivative instruments are on the accompanying Consolidated Balance
Sheet as of September 30, 2011 (in thousands):
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="24%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="31%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td nowrap="nowrap" align="left"><b>Derivatives Designated as</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Asset Derivatives </b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="4" style="border-bottom: 1px solid #000000"><b>Liability Derivatives</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b>Hedging Instruments</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Balance Sheet Location</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Fair Value</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"><b>Balance Sheet Location</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Fair Value</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left" valign="top"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest Rate Swaps
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left" valign="top">Other Long-Term Liabilities</td>
<td> </td>
<td align="left">$</td>
<td align="right">2,149</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 7 - us-gaap:SegmentReportingDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>7 — Segment Information</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Company currently has one reportable business segment, the Truck segment. The Truck
segment operates a network of commercial vehicle dealerships that provide an integrated
one-stop source for the commercial vehicle needs of its customers, including retail sales of
new and used commercial vehicles; aftermarket parts, service and body shop facilities; and a
wide array of financial services, including the financing of new and used commercial vehicle
purchases, insurance products and truck leasing and rentals. The commercial vehicle
dealerships are deemed as a single reporting unit because they have similar economic
characteristics. The Company’s chief operating decision maker considers the entire Truck
segment, not individual dealerships when making decisions about resources to be allocated to
the segment and assess its performance.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Construction Equipment segment is no longer reported as a separate business segment
because the Company sold the assets of its John Deere construction equipment business. See
Note 11 for further discussion of the sale of the construction equipment business.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Company evaluates performance based on income before income taxes not including
extraordinary items.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Company accounted for intersegment sales and transfers as if the sales or transfers
were to third parties, that is, at current market prices. There were no material intersegment
sales during the quarters or nine months ended September 30, 2011 and 2010.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table contains summarized information about reportable segment revenue,
segment income or loss from continuing operations and segment assets for the periods ended
September 30, 2011 and 2010 (in thousands):
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="58%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Truck</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Segment</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>All Other</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Totals</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><i>As of and for the three months ended
September 30, 2011</i>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Revenues from external customers
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">691,469</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">4,976</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">696,445</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Segment income from continuing operations
before taxes
</div></td>
<td> </td>
<td> </td>
<td align="right">26,875</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(441</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">26,434</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Segment assets
</div></td>
<td> </td>
<td> </td>
<td align="right">1,459,161</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">26,017</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,485,178</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><i>For the nine months ended September 30, 2011</i>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Revenues from external customers
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">1,791,099</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">13,432</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,804,531</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Segment income from continuing operations
before taxes
</div></td>
<td> </td>
<td> </td>
<td align="right">59,481</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,237</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">58,244</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"><i>As of and for the three months ended
September 30, 2010</i>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Revenues from external customers
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">401,890</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">3,951</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">405,841</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Segment income from continuing operations
before taxes
</div></td>
<td> </td>
<td> </td>
<td align="right">12,838</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(463</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">12,375</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Segment assets
</div></td>
<td> </td>
<td> </td>
<td align="right">1,112,454</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">32,270</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,144,724</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"><i>For the nine months ended September 30, 2010</i>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Revenues from external customers
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">1,023,321</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">11,647</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,034,968</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Segment
income from continuing operations before taxes
</div></td>
<td> </td>
<td> </td>
<td align="right">25,185</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(774</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">24,411</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Revenues from segments below the quantitative thresholds are attributable to three
operating segments of the Company. Those segments include a retail tire company, an insurance
agency and a guest ranch operation. None of those segments has ever met any of the
quantitative thresholds for determining reportable segments.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 8 - us-gaap:IncomeTaxDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>8 — Income Taxes</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Company included accruals for unrecognized income tax benefits totaling $1.5 million
as a component of accrued liabilities as of September 30, 2011, and December 31, 2010. The
unrecognized tax benefits of $1.5 million at September 30, 2011, if recognized, would impact
the Company’s effective tax rate. An unfavorable settlement would require a charge to income
tax expense and a favorable resolution would be recognized as a reduction to income tax
expense. As of September 30, 2011, the Company has accrued interest of $130,000 related to
unrecognized tax benefits in the current provision for income taxes. No amounts were accrued
for penalties.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Company does not anticipate a significant change in the amount of unrecognized tax
benefits in the next 12 months. As of September 30, 2011, the tax years ended December 31,
2008 through 2011 remained subject to audit by federal tax authorities and the tax years ended
December 31, 2006 through 2011, remained subject to audit by various state tax authorities.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 9 - us-gaap:BusinessCombinationDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>9 — Acquisitions</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">The following acquisitions were considered business combinations accounted for under ASC 805
“Business Combinations.” Pro forma information is not included in accordance with ASC 805
since no acquisitions were considered material individually or in the aggregate.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On March 14, 2011, the Company acquired certain assets of Asbury Automotive Atlanta
L.L.C., a subsidiary of Asbury Automotive Group, Inc., which operates commercial truck and bus
dealerships in the metro Atlanta area under the “Nalley Motor Trucks” name. The acquisition
includes the International, Hino, Isuzu, UD, IC Bus and Workhorse franchises in metro Atlanta,
dealership locations in Atlanta and Doraville and a collision center in Atlanta.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">These locations are operating as Rush Truck Centers and offer commercial vehicles
manufactured by International, Hino, Isuzu, UD, IC Bus and Workhorse Custom Chassis in addition
to parts, service, body shop, financing and insurance capabilities. The transaction
was valued at approximately $55.3 million, with the purchase price paid in cash. The
operations of Nalley Motor Trucks are included in the accompanying consolidated financial
statements from the date of the acquisition. The preliminary purchase price was allocated
based on the fair values of the assets at the date of acquisition as follows (in thousands):
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="58%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">March 31,</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">September 30,</td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Adjustment</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Inventory
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">21,004</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">21,004</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Property and equipment
</div></td>
<td> </td>
<td> </td>
<td align="right">11,841</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(1,970</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">9,871</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Prepaid expenses
</div></td>
<td> </td>
<td> </td>
<td align="right">41</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">41</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Accrued expenses
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(453</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(453</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Goodwill
</div></td>
<td> </td>
<td> </td>
<td align="right">22,854</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,970</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">24,824</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">55,287</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">55,287</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As the values of these assets and liabilities are preliminary in nature, they are subject
to adjustment as additional information is obtained about the facts and circumstances that
existed at the acquisition date. When the valuation is final, any changes to the preliminary
valuation of acquired assets and liabilities could result in adjustments to identified
intangibles and goodwill. The adjustment to the purchase price allocation in the second
quarter relates to the finalization of real estate appraisals for property acquired. All of
the goodwill acquired in the Nalley Motor Trucks acquisition will be amortized over 15 years
for tax purposes.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On February 21, 2011, the Company acquired certain assets of Heintzelman’s Truck Center,
which consisted of a Ford commercial vehicle dealership in Orlando, Florida. The Company is
operating the facility as a full-service Rush Truck Center offering Ford trucks, parts,
service, leasing, financing and insurance. The transaction was valued at approximately $4.7
million, with the purchase price paid in cash. The operations of Heintzelman’s Truck Center
are included in the accompanying consolidated financial statements from the date of the
acquisition. The preliminary purchase price was allocated based on the fair values of the
assets at the date of acquisition as follows (in thousands):
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="86%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Inventory
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">3,125</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Accounts receivable
</div></td>
<td> </td>
<td> </td>
<td align="right">264</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Property and equipment
</div></td>
<td> </td>
<td> </td>
<td align="right">221</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Prepaid expenses
</div></td>
<td> </td>
<td> </td>
<td align="right">6</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Accrued expenses
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(2</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Goodwill
</div></td>
<td> </td>
<td> </td>
<td align="right">1,050</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">4,664</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As the value of certain assets and liabilities are preliminary in nature, they are subject
to adjustment as additional information is obtained about the facts and circumstances that
existed at the acquisition date. When the valuation is final, any changes to the preliminary
valuation of acquired assets and liabilities could result in adjustments to identified
intangibles and goodwill. All of the goodwill acquired in the Heintzelman’s Truck Center
acquisition will be amortized over 15 years for tax purposes.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 10 - us-gaap:ComprehensiveIncomeNoteTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>10 — Comprehensive Income</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table provides a reconciliation of net income to comprehensive income (in
thousands):
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="44%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Three months ended</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Nine months ended</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>September 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>September 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">16,045</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">14,159</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">35,830</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">22,084</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Other comprehensive loss:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Change in fair value of cash flow swaps, net of tax
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(596</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(680</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,089</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(680</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Unrealized loss on available-for-sale securities,
net of tax
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(587</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Comprehensive income
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">15,449</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">13,479</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">34,154</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">21,404</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 11 - us-gaap:DisposalGroupsIncludingDiscontinuedOperationsDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>11 — Discontinued Operations</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On September 9, 2010, the Company sold the assets of its John Deere construction equipment
business, including its Rush Equipment Centers in Houston and Beaumont, Texas, to Doggett Heavy
Machinery Services, LLC. The results of operations of the construction equipment business have
been classified as discontinued operations in the Company’s consolidated statements of income,
and excluded from business segment information.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Net sales and earnings before income taxes related to the discontinued business were as
follows (in thousands):
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="44%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Three months ended</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Nine months ended</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>September 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>September 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net Sales
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">7,563</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">25,772</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Earnings before income taxes:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Results of operations from discontinued operations
before
income taxes
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(95</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">917</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Gain on disposition
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">10,091</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">10,091</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Income tax (expense)
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(3,868</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(4,293</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income from discontinued operations
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">6,128</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">6,715</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Basic earnings per common share from discontinued
operations, net of tax
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">.16</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">.18</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Diluted earnings per common share and common share
equivalents from discontinued operations, net of tax
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">.16</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">.18</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
27242349
10727073
60000000
20000000
60000000
20000000
26798707
10700044
27218492
10726072